Cost of Building an ADU in California in 2023

The Rise of ADUs in California

With the demand for housing on the rise and the need for flexible living options becoming more apparent, ADUs have emerged as a practical and cost-effective solution. They are growing more popular by the day across the US, as regulations become less stringent and fee waivers make them more affordable to homeowners. The number of ADU permit applications filed in California showed a 3% increase in 2022, with around 30,000 ADU application permits submitted. The demand for ADUs remains strong, particularly in Southern California, with Los Angeles accounting for about 60% of ADU permit applications over the past five years.

How Much Does an ADU Cost in California?

ADUs are versatile living spaces that can unlock new possibilities for your home. On average, an ADU can cost around $200,000-$400,000 depending on your ADU type, location, size, and other specifications.

If you’re trying to decide whether an ADU is a worthwhile investment for your home, read on for a full breakdown of the costs involved in building an ADU, the factors—such as location, size, and type—that can affect these costs, and how you can save money on your project.

First, let’s take a look at the soft costs (costs excluding labor and material) and hard costs (labor and material-related costs) of building an ADU.

What Are the Soft Costs Involved in an ADU?

While hard costs typically take up a significant portion of the overall spending, soft costs are also an important part of the budget to consider. Average soft costs of an ADU in California amount to 10-15% of its total cost. Understanding and accounting for soft costs upfront can help you plan your ADU project effectively and avoid unexpected expenses. Here’s a sample breakdown of the soft costs:

Average architectural cost: $20,000-$30,000

Average consultation cost: $8,000-$12,000

Average permit costs:

• Building permit fee: $2,000-$10,000
• City fee: $3,000-$11,000

Importantly, these costs can vary depending on the scope of the project, the project’s location, and other factors.

1. Architectural design cost

The first step in building an ADU is designing and drafting the plans. Architectural costs can typically range from 10%-15% of the total project cost, so if your ADU is estimated to cost $240,000, an architect's fee at 10% would amount to $24,000.

2. Consulting cost

A commonly seen base level of consultants for an ADU project includes a structural engineer for framing and calculations, a Title 24 energy consultant for an energy efficiency analysis, and a boundary/site surveyor to establish official property boundaries and dimensions (Notably, in certain circumstances some of these may not be applicable to a project.) The average consultation cost for these services in California ranges between $8,000-$12,000, and the costs may increase for more complex projects requiring additional support. Depending on your property type, you may have to consult more professionals for geotechnical/soil reports, grading and drainage plans, arborist reports, or fire prevention plans.

3. Permit Cost

Before starting construction, you must obtain permits from your local planning department. Building permits can range from $2,000-$10,000 depending on your location, while city fees can come in between $3,000-$11,000. Both building permits and city fees can vary for each city based on the size and valuation of your ADU. For ADUs larger than 750 sq.ft., certain municipalities may impose Impact Fees, typically proportional to the size of the ADU relative to the main house. Each city also has specific requirements, so check with your local authorities to determine the necessary permits and associated costs.

What Are the Hard Costs Involved?

When building an ADU in California, hard costs encompass the physical construction aspects of your project, including foundation work, framing, roofing, electrical and plumbing systems, insulation, windows, doors, flooring, and finishes. The actual expenses can vary based on size, design, quality, and complexity, with the average being 85-90% of your total ADU cost.

1. Site preparation cost

Site preparation ensures a solid foundation and proper infrastructure for your ADU. Grading may be necessary to level the area, and these costs can vary depending on the condition of your property. Factors such as rocks, piping, or wiring underground can increase the cost of excavation and other site work. Once site prep is done, the foundation is built, providing a sturdy base for your ADU. A sample of site preparation costs for a project can include: approximately $50-$200 per cubic yard for excavation, $4,200-$13,200 for concrete foundations, $4-$8 per square foot for a concrete slab, and $3,200-$9,000 for retaining walls.

2. Construction cost

Construction is usually what costs the most out of your project, and it can vary based on size, design, and complexity. On average, a 400-600 sq. ft. ADU might cost $200,000-$300,000 to build, but the total construction cost can be higher if you have specific requirements and finishes.

3. Utilities and interior cost

All electrical, plumbing, and HVAC systems should meet building codes. These systems can commonly cost between $3,400-$10,400, while interior finishes can typically cost $10-$60 per square foot. Higher-end materials and appliances can cost you more. These costs highly depend on your location and other factors; let’s take a closer look below.

What Are the Factors That Affect the Cost of Building an ADU?

It’s important to understand all the potential costs of your project so you can work within your budget. Working with a transparent team of experts like Cottage can ensure there are no hidden costs, helping you optimize your space while taking the following factors into account:

1. Size

Construction costs often depend on the size of the ADU. The average size of new ADUs ranges from 600-1200 sq.ft., while the minimum and maximum size limits in California are 150 sq. ft. and 1,200 sq. ft. respectively. Detached ADUs usually take up the most amount of space and require their own setback regulations, while conversion ADUs make use of existing footprints and space.

2. Location

The cost per square foot of an ADU in different areas can vary depending on your local housing market and other factors. That said, due to the rising need for affordable housing, there are measures in place to support the development and rental of ADUs and make them more accessible.

Let’s look at the cost per square foot of ADUs in Los Angeles, San Francisco, and San Diego for more context. Note that these figures are just rough estimates, and actual costs can be influenced by site conditions, project type, selected finishes, and other factors.

• Los Angeles: $250-$500 per square foot of ADU
• San Francisco: $350-$900 per square foot of ADU
• San Diego: $300-$600 per square foot of ADU

3. Amenities

Amenities can significantly enhance the functionality, appeal, and overall value of your ADU. When it comes to amenities, you can prioritize the purpose of your ADU. For instance, if your ADU is for a senior family member, you can consider adding accessibility elements. You can also incorporate design elements such as large windows and skylights to create a spacious feel.

Budgetary restrictions and size constraints shouldn’t stop you from building the ADU of your dreams, so keep reading for how best to maximize your ADU by picking an ADU company suited to your needs.

How Can You Cut ADU Costs With the Right ADU Company?

When choosing an ADU company, consider each stage of the ADU process, from developing a floor plan and conceptualizing your ADU to constructing it. Ideally, you would be able to rely on a team who can assist you every step of the way and ensure a final product that is budget-optimized and in keeping with your vision.

With that in mind, here are some key things to consider when looking for an ADU company:

• High-quality references and reviews
• A proven track record in ADUs
• A licensed, insured, and bonded contractor
• Fair pricing aligned with quality and specifications
• Familiarity with local ADU laws and regulations
• Effective communication, timeliness, and transparency throughout the project

Remember, finding the right ADU contractor sets the foundation for a smooth and stress-free ADU journey. Cottage believes in transparency every step of the way. Our reliable network of licensed contractors and ADU specialists can get the job done with no hidden fees.

Here are some projects we designed and helped build, along with their costs.

Take a look at an ADU we designed for a senior by utilizing the backyard space effectively. The ADU is a separate living unit, providing privacy and independence in a relaxing environment. This project was wrapped up with “no surprises on cost,” as the homeowner put it.

We built another ADU to provide flexible space for a family. This ADU also serves as a separate living unit, while incorporating the open-space design of the main home. Its versatile layout allows for various uses, such as a guest suite, a space for gatherings, and a study area.

These projects exemplify how we can tailor ADUs to your specific lifestyle and create versatile living spaces while maximizing the use of the available property. If you are interested in learning more about how Cottage can help build your dream ADU or would like to get an estimate, book a free consultation with a Cottage ADU expert today!

FAQs

Are ADUs a good investment?

Yes! ADUs are considered long-term investments, and holding onto the property for several years can maximize your returns, including both gross rental income and increases in property value.

When it comes time to sell your home, an ADU can enhance its appeal and attract potential buyers. Having an ADU can increase your property’s resale value. Renting out your ADU can also help offset the costs of construction and ongoing maintenance, allowing you to recover your investment over time. Long-term rentals (LTRs) offer stability and require less frequent maintenance than short-term rentals (STRs).

Beyond the financial benefits, ADUs offer various lifestyle advantages. They provide flexibility to accommodate aging family members and serve as guest houses for visiting friends and family, enhancing the convenience and comfort of your property.

What is the cheapest way to build an ADU?

Typically, the most cost-effective ADU type is a garage conversion ADU (if your garage is in sound condition and requires no major fixes). Your ADU can use the existing structure and cut down on construction costs, which take up a significant portion of your total cost. Depending on the status of your garage, this approach can also reduce other hard costs such as plumbing, HVAC, electrical wiring, and other facilities, leaving you with lower overall costs.

Does an ADU increase property taxes?

Property tax rates for ADUs can generally range between 1%-1.5% of the construction cost – a large amount in the larger scheme. This means if your ADU construction cost is $300,000, you could pay around $3,000 in additional yearly taxes. It may also be possible to write off some ADU expenses, such as construction costs and maintenance and repair costs.

In many areas, assessors will determine the market value of your newly built ADU as of the date you finished building it. They value it at a "wholesale" cost, which can be lower than the actual cost of building the ADU. Importantly, in California, a new ADU will not trigger a reassessment of your existing home, and so the taxes related to your main home will remain the same.

To get a better understanding, we recommend consulting with a tax professional or the local tax assessor's office. Your team of ADU specialists can also help you determine taxes to avoid unexpected costs.

How much does an ADU increase property value in Los Angeles?

ADUs offer a range of financial advantages, including the potential to increase the value of your home by up to 24%-30%, depending on your ADU type, facilities, and location. Apply this simple equation using the value per square foot of your current home to get a rough estimate of added value for your ADU.

(Current value/sq. ft.) x sq. ft. of proposed ADU

Can you get a home loan for an ADU?

Absolutely! It is possible to obtain a home loan for an ADU in California. The California Housing Finance Agency grant program is highly recommended for ADUs. You can also consider traditional HELOC (Home Equity Line of Credit) and home equity loans, construction loans, or cash-out refinance options.

How much is an ADU permit in Los Angeles?

Permit costs can range between $2,000-$10,000 depending significantly on your ADU size and other factors such as design and specific location. On average, the permit fee for a 1,200-square-foot unit is approximately $8,000.

Why build an ADU in California?

California has the most valuable housing market in the country, with a total value of $9.24 trillion as of December 2021. Given this, the California Department of Housing and Community Development (HCD) develops building codes, policies, and regulations that benefit homeowners. For instance, the passage of Assembly Bills 68 and 881, and Senate Bill 9, simplify the process of constructing and renting out ADUs.